AT&T’s Project VIP Ahead of Schedule and Still Ramping

May 10, 2013

AT&T’s Project Velocity IP (VIP) is running ahead of schedule with nearly 200 million LTE POPs covered to date, and the carrier expects to complete almost 90 percent of 300 million POPs by the end of this year, John Stephens, senior executive VP and CFO, told AT&T’s first quarter earnings call.

“It’s still early, but we already have made tremendous progress with our LTE deployment,” he said. “The LTE network also is operating at high [network performance] levels.”

Capital expenditures for the first quarter were $4.3 billion with more than half going to wireless. Total capex is expected to be $21 billion as Project VIP ramps up. However, AT&T is lowering its long-term capex to the $20 billion range for both 2014 and 2015, according to Stephens, down from the $22 billion level that was announced as part of project VIP last November.

“This reduction brings no slowdown in our project VIP deployment. As we refine our VIP planning, we are seeing greater integration efficiencies in our spending curves,” he said. “Our LTE build is accelerating into this year’s spending. That along with additional savings in non-Project VIP spending gives us confidence to revise our expectations without changing our overall build target.”

The driver of Project VIP, mobile data, continues to increase service revenue, which now represents a $20 billion annualized stream growing at 21 percent. Smartphone subscribers, which now make up 70 percent of AT&T’s postpaid base, increased by more than 1.2 million in the quarter and by more than 7.1 million in the last 12 months.